INDEX SCREEN DEFINITIONS FOR THE ESG ADVANCED EQUITY SUITE
Many of our iShares sustainable ETFs seek to track an index with business involvement screens. Business involvement screens seek to remove exposure to controversial business activities that may pose risks or violate an investor’s preferences. Learn more about the specific screens below.
Note: Fossil fuels, nuclear power and palm oil follow a three-step approach, whereby companies are excluded on conditional bases.
RELATED iSHARES FUNDS
| SCREEN | METHODOLOGY |
|---|---|
| Adult entertainment | All companies that produce, direct, or publish adult entertainment materials that fall into the following categories: Producer of X-rated films, Pay-per-view programming or channels, sexually explicit video games, books or magazines with adult content, Live entertainment of an adult nature, adults-only material on the internet. All companies deriving 5% or more aggregate revenue from the production, distribution and retail of adult entertainment materials. |
| Alcohol | All companies deriving 5% or more revenue from the manufacture of alcoholic products. All companies classified as a “Producer” that derive USD 500 million or more in revenue from manufacturing, distributing, retailing, licensing, and supplying alcoholic products. All companies deriving 15% or more aggregate revenue from the manufacture, distribution, retailing, licensing, and supply of alcoholic products. |
| Civilian firearms | All companies that manufacture firearms and small arms ammunitions for civilian markets. It does not include companies that cater to the military, government, and law enforcement markets. All companies deriving 5% or more aggregate revenue from the production and distribution (wholesale or retail) of firearms or small arms ammunition intended for civilian use. All companies deriving USD 20 million or more revenue from the production and distribution (wholesale or retail) of firearms or small arms ammunition intended for civilian use. |
| Conventional weapons | All companies deriving 5% or more revenue from the production of conventional weapons and components. All companies deriving 10% or more aggregate revenue from weapons systems, components, and support systems and services. |
| Controversial weapons | All companies with any tie to Controversial Weapons (cluster munitions, landmines, depleted uranium weapons, biological/chemical weapons, blinding lasers, non-detectable fragments and incendiary weapons), as defined by the methodology of the MSCI Global Ex-Controversial Weapons Indexes available at MSCI. |
| For profit prisons | All companies deriving 50% or more revenue from involvement in the operation of “For Profit Prisons” or the provision of integral services to these types of facilities. These facilities may be alternatively known as private prisons. |
| Fossil fuels | The below criteria follow a three-step approach, whereby companies are excluded on conditional bases: Step 1: Identify all companies that belong to the Energy GICS© Sector (GICS© Code - 10) or have an industry tie to fossil fuels (thermal coal, oil and gas) – in particular, reserve ownership, related revenues and power generation. This list does not include companies providing evidence of owning metallurgical coal reserves. Step 2: Identify all companies flagged in Step 1 that additionally derive 50% or more revenue from products, services, or infrastructure projects supporting the development or delivery of renewable energy and alternative fuels, if they do not have: • an industry tie to thermal coal (i.e., reserve ownership, production, and power generation), • an industry tie to oil sands (i.e., reserve ownership and production activities), or • evidence of owning fossil fuel reserves used most likely for energy applications. Step 3: All companies identified by Step 1 but not by Step 2 are excluded. |
| Gambling | All companies deriving 5% or more revenue from ownership or operation gambling facilities such as casinos, racetracks, bingo parlors, or other betting establishments. All companies classified as involved in "Operations" that derive USD 500 million or more in revenue from ownership or operation of gambling facilities, provision of key products or services fundamental to gambling operations, and licensing of gambling products. All companies deriving 15% or more aggregate revenue from ownership or operation of gambling facilities, provision of key products or services fundamental to gambling operations, and licensing of gambling products. |
| Genetically modified organisms (GMOs) | All companies deriving more than 0% revenue from genetically modifying plants, such as seeds and crops, and other organisms intended for agricultural use or human consumption. |
| Nuclear power | The below criteria follow a three-step approach, whereby companies are excluded on conditional bases: Step 1: Identify all companies that own or operate nuclear power plants, own or operate active uranium mines, are involved in uranium enrichment and processing, are involved in the design and engineering of nuclear power reactors, or derive 15% or more aggregate revenue from ownership or operation of nuclear power plants and supply of key nuclear-specific products or services. Step 2: Identify all companies flagged in Step 1 but derive 50% or more revenue from products, services, or infrastructure projects supporting the development or delivery of renewable energy and alternative fuels. Step 3: All companies identified by Step 1 but not by Step 2 are excluded. |
| Nuclear weapons | All companies that manufacture nuclear warheads and/or whole nuclear missiles. It includes assembly and integration of warhead and missile body, as well as companies with contracts to operate/manage government-owned facilities that manufacture nuclear warheads and missiles. All companies that manufacture components that were developed or are significantly modified for exclusive use in nuclear weapons (warheads and missiles). It includes companies with contracts to operate/manage government-owned facilities that manufacture components for nuclear warheads and missiles. All companies that manufacture or assemble delivery platforms that were developed or significantly modified for the exclusive delivery of nuclear weapons. All companies that provide auxiliary services related to nuclear weapons, such as repairing and maintaining nuclear weapons, providing overhaul and upgrade services, stockpiling and stewardship, R&D work, testing and simulations, etc. It also includes companies with contracts to operate/manage government-owned facilities that conduct R&D, testing, simulations, and other essential sciences on nuclear weapons. All companies that manufacture components that were not developed or not significantly modified for exclusive use in nuclear weapons (warheads and missiles) but can be used in nuclear weapons. All companies that manufacture or assemble delivery platforms that were not developed or not significantly modified for the exclusive delivery of nuclear weapons but have the capability to deliver nuclear weapons. All companies that manufacture components for nuclear-exclusive delivery platforms. |
| Palm oil | The below criteria follow a three-step approach, whereby companies are excluded on conditional bases: Step 1: Identify all companies deriving more than 0% revenue from cultivating oil palm trees and harvesting fresh fruit bunches (FFBs) used to produce palm oil products, or 5% or more revenue from distributing palm oil products, such as crude palm oil, crude palm kernel oil, refined, bleached, and/or deodorized palm oil and palm kernel oil. Step 2: Identify all companies flagged in Step 1 but have 75% or more of their palm oil holdings / estates certified by the Roundtable on Sustainable Palm Oil. Step 3: All companies identified by Step 1 but not by Step 2 are excluded. |
| Predatory lending | All companies deriving 5% or more revenue from products and services associated with certain controversial lending practices. |
| Tobacco | All companies that manufacture tobacco products, such as cigars, blunts, cigarettes, e-cigarettes, inhalers, beedis, kreteks, smokeless tobacco, snuff, snus, dissolvable and chewing tobacco. It includes companies that grow or process raw tobacco leaves. All companies deriving 5% or more aggregate revenue from the manufacture, distribution, retailing, licensing, and supply of tobacco products. |